10 Ways with Kids and Cash

How do you teach children that money doesn’t grow on trees? My son almost always has a wish list of things he’d like to buy. If too many home deliveries arrive addressed to me, he tells me it isn’t fair. It occurred to that almost all his views on money come via us and how we spend and save. We’ve learnt lessons and are now pretty organised when it comes to money, in teaching my son about money, I’ve been thinking about what worked for us;

Money of his own.
Like many British families our extended family lives at a distance, since my son was small relatives have given cash as a gifts, it’s an easy option for a child you might not know so well. We’ve always talked about that money as ‘savings’ “add that to your savings”. Instead of ‘spending money’. Simply to reinforce the idea of hanging on to money, it isn’t necessarily for immediate gratification. Because when it’s gone it has gone and we’ve been clear that we save too.

Where money comes from.
We work for the money, which buys the food, pays for the house and everything else. Some jobs earn money than others. So some people have more money than others. Simple life facts.

Spending.
I’ve always encouraged my son to do the actual spending. Standing on tip-toes to hand the money over at the counter. To reinforce that money is given in exchange and for items. It has helped him make the connection between an item and it’s value.

The value of things.
We’ve always talked about how much things cost, from bread to toys to holidays and aimed to explain what is affordable to our family and what isn’t. He knows there are things we’d like but can’t afford.

Coins.
Like most kids he is fascinated by the shapes and sizes of shiny coins. He knows money equals goodies. We’ve spent time identifying the different values. £1 coins work better than £5 notes, for us. They can be put into different piles to explain costs and show easily what might be left.

Do you really need that conversations.
Otherwise know as protracted negotiations. Reminding my child that he already has one of that and maybe he doesn’t need two. Sometimes, I’ve let him make the decision and live with a new bit of plastic and an empty money-box. Wanting something vs. an empty money-box is a good reminder of how money works. Saving sometimes gets you something bigger and better.

Saving.
My son isn’t great with deferred gratification. Lego has been great for teaching, the benefits of saving. The bigger box, the bigger the value, the greater the possibilities. Saving and waiting gets him something he wants more.

Clarity.
We’ve always been clear from the outset, we are going into this shop to buy X but we are not buying toys and stuck to it. There are other times, when we’ve said, you can choose something but it needs to cost no more than Y amount.

Pocket Money.
As with any aspect of parenting, it’s a constant learning curve and we are conscious that both parents need the same approach and that he learns from our attitudes and spending patterns. We aren’t at the pocket-money stage, but I imagine it is something we will consider over the next year, probably earned through chores.

For the future.
As a teenager I wanted a clothes allowance, for the freedom of choice and flexibility and will definitely organise an allowance for my boy, when he get’s to teens, he will be looking at debit cards for using at ATM. Pick one with competitive rates of interest paid regularly, weekly balance alerts to keep track of funds and access to high street branches. Tools towards adult responsibilities of earning and managing money. Fingers crossed, we’ve given him some good skills to manage his own money in the future.